This weekend's competition in Wisconsin is a bit more intense than it was in your grade school gym class.
Groupon, the online coupon giant, is one of the fastest growing companies in the world, but has been facing increasing doubt about its financial viability and long-term future. Since first going public in November, its stock has plummeted from $26 to $14.
The company recently hired Paul Taafe as its new public relations guru after several high profile missteps, including an accounting error that gave an overly optimistic picture of finances. Groupon recently issued a revision to its fourth quarter financial results, revealing that it had overstated its revenue by $14.3 million.
“If you’re a new public company, this is a big no-no,” said Douglas MacMillan, technology reporter for Bloomberg. “You want to be telling investors that you’re confident in your model, they’re doing the opposite.”
MacMillan told Here & Now‘s Robin Young that Groupon is basically sending investors a message that their internal financial controls are inefficient.
The accounting error was discovered after the company realized that many customers had returned their coupons in January, according to The Wall Street Journal. MacMillan says Groupon started offering more luxury items and deals with higher price points in the past year, which resulted in a higher refund rate.
The company’s growing pains raise questions about how long the Groupon model can last. In addition to having to tackle hundreds of competitors including LivingSocial, Amazon Local, and Google Deals, the company is facing a shareholder lawsuit and a possible investigation by the Securities and Exchange Commission.
“His work’s cut out for him,” said MacMillan, referring to Taafe’s new role in managing public relations for Groupon.